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Friday, November 9, 2007

Should You Approve, Endorse or Reject a Change Request?

Knowing how to manage scope changes can make the difference between project success and failure. To increase your chance of success, you need a technique that enables you to track and manage changes as they occur.

Some changes to project scope, such as legislative changes or new safety standards, are mandatory. By definition, mandatory changes must be implemented. Other requests for changes are not mandatory but may be beneficial. If implemented, these changes can impact the project schedule, budget, or both, so they must be effectively managed.

Scope change control defines the procedures by which the project scope may be changed. It includes the paperwork, tracking systems, and approvals necessary for authorizing changes.

Before authorizing changes, a project manager must:

assess the impact of the requested change

choose the appropriate status for the change request

Since the opportunity to add value decreases and the cost of change increases as project work progresses, you need to consider the work effort and the associated cost when assessing the impact of proposed scope changes.
The more time a scope change requires, the more it will affect the project budget. You need to assess the length of time, or work effort, it will take to implement the proposed change.

The most common method for calculating the work effort in relation to a specific scope change request is the resource profiling method. The resource profiling method uses the Baseline Effort, Skill Factor, Work Interruption Factor, and Part-time Effect to calculate Normalized Effort (NE)—a real-world estimate of work effort.

Baseline Effort (BE) - The BE assumes that the task will be worked on full-time, without interruption, by a team member with a high level of technical skill and knowledge. To determine the BE, determine the ideal length of time it will take to complete the task in a perfect world.

Skill Factor (SF) - The SF represents the proficiencies of the team members who will complete the proposed work. A value of one indicates expert knowledge in the area. A value of two indicates a proficient and acceptable skill level. A value of three indicates little or no knowledge.

Work Interruption Factor (WIF) - The WIF takes into account reasons for temporary work stoppage. The most common type of interruptions are idle time, meetings, breaks, and communication. To calculate the WIF, add ten percent per interruption type and one percent for each team member.

Part-time Effect (PTE) - The PTE compensates for the fact that the team may work on more than one activity at a time. To determine PTE, assign a 0 percent loss for full-time work, a 10 percent loss for three quarter time work, a 15 percent loss for part-time work, and a 20 percent loss for one quarter time.

Once you know how to calculate the factors used in resource profiling, you can calculate the Normalized Effort (NE).
To calculate NE, subtract the WIF from 100. Then divide 100 by this value. Next, subtract the PTE from 100. Then divide 100 by this value. Finally, multiply these two values with BE and SF.

In addition to determining the work effort, you need to determine the associated costs of the proposed change. There are many direct and indirect costs associated with implementing a scope change. Some of these costs include:

overtime payments

late completion penalty

lost business opportunity

rework

new equipment

insurance requirements

changes to guarantee or warranty.

The associated costs of a proposed change should be expressed in a cost estimate (CE). To produce an effective cost estimate, you need to include all of the resources required for the task, including the time it takes to complete the change. The more resources you include, the more accurate your cost estimate will be.

There are some situations in which you won't have enough information to assess the impact of a requested change. The change request form could be missing vital information or be improperly filled out. In these situations, you should request more information from the person who originally requested the scope change or from other members of the project team who would be able to supply supporting details. You must then reassess the impact of the change.

Once you have all of the required information, you need to choose the appropriate status for the change request. The three status options are: approve, endorse, or reject.

You should base your scope change control decision on the results of comparing the estimated effort and the associated costs to the contingency reserve for your project.

You should approve a change request if the contingency reserve is greater than the effort and cost estimate. For example, if the estimated effort is 12 hours, and the contingency reserve is 40 hours, you should approve the change.

You should endorse the change request to the project steering committee if the estimated effort and associated cost are less than ten percent above the reserve. The project steering committee would need to approve the discrepancy.

You should reject a change request if the contingency reserve is less than the effort and cost estimate. Approving a change in this situation would cause deviations and overruns not approved by the project steering committee or the client.

By using accurate work effort and cost estimates, you will be able to assess the impact of project changes and determine the status of the changes. These methods of scope change control will help your project stay on the right track.